{"id":4046,"date":"2025-05-22T14:49:05","date_gmt":"2025-05-22T12:49:05","guid":{"rendered":"https:\/\/denisemmanuelphilippetax.be\/?p=4046"},"modified":"2025-05-23T14:54:29","modified_gmt":"2025-05-23T12:54:29","slug":"is-the-cayman-tax-applicable-to-master-feeder-fund-structures","status":"publish","type":"post","link":"https:\/\/denisemmanuelphilippetax.be\/en\/tax-news-en\/is-the-cayman-tax-applicable-to-master-feeder-fund-structures\/","title":{"rendered":"Is the Cayman Tax applicable to master-feeder fund structures ?"},"content":{"rendered":"

This is one hot topic for Belgian tax practitioners dealing with fund structuring involving (on top) Belgian individuals (HNWI).<\/strong><\/p>\n

1. Definition of “dedicated funds” qualifying as a legal construct<\/strong><\/p>\n

Since 2024, a fund (or a sub-fund) qualifies as a “legal construct” (“construction juridique” \/ “juridische constructie”) if “the rights in the fund (or the sub-fund) are held for more than 50% by one person or a number of related persons” (Article 2, \u00a71er, 13\u00b0\/1, (2) ITC).<\/p>\n

2\ufe0f. Belgian feeder fund – Luxembourg master fund (SICAV RAIF)<\/strong><\/p>\n

\ud83d\udd39 Let us assume that non-related Belgian individuals hold shares in a Belgian feeder vehicle, a non-regulated fund. The Belgian feeder holds in its turn 100% of the shares in a Luxembourg master fund, e.g. a Luxembourg SICAV RAIF.<\/p>\n

\ud83d\udd39 According to a literal reading of Article 2, \u00a71er, 13\u00b0\/1, (2) ITC, the Luxembourg SICAV RAIF could potentially fall in the definition of “dedicated fund” (qualifying as a legal construct): the rights in the SICAV RAIF are indeed held for more than 50% by “one person”, i.e. the Belgian feeder fund.<\/p>\n

\ud83d\udd05 This would imply that the Belgian individuals (on top of the Belgian feeder vehicle) could potentially be caught by the Cayman tax as “founders” of a legal construct (SICAV RAIF).<\/p>\n

In this context, it is worthwhile stressing that the definition of “founder” of a legal construct has been recently significantly broadened. Individuals (Belgian tax residents) holding directly or indirectly the legal or economic rights of a legal construct, through a chain of intermediate constructions, may be qualified as “founders” (new Article 2, \u00a7 1, 14\u00b0, fourth indent of the ITC).<\/p>\n

Not sure that this outcome was foreseen by the Belgian legislator…
\n
\n<\/strong>3\ufe0f. Qualification of the Belgian feeder fund as an intermediate construction<\/strong><\/p>\n

In these typical master-feeder fund structures, the qualification of the feeder fund as an “intermediate construction” is key.<\/p>\n

\u26a0\ufe0f Tip for preventing headaches or painful migraines: managing to avoid the qualification of the feeder vehicle as an “intermediate construction”, by relying on the exception for non-dedicated UCITS\/AIF laid down in Article 2, \u00a7 1er, 13\u00b0\/1, alin\u00e9a 1 ITC. The intermediate construction will then become a “blocker”…<\/p>\n

For more details (and nice structure charts!), see my article in the next issue of the RGFCP co-authored with Kevin Dorban.<\/p>\n

Denis-Emmanuel Philippe\u00a0<\/strong><\/em><\/p>\n